Victory Capital Holdings, Inc. Class A Common Stock · NASDAQ:VCTR
Victory Capital Holdings, Inc. Class A Common Stock — Q2 2021 Earnings Presentation
34 slides from Victory Capital Holdings, Inc. Class A Common Stock's earnings presentation, Aug 6, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation August 6, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business s
Slide 3: Agenda
Agenda Quarterly Business Overview Investment Performance Second-Quarter 2021 Financial Results Appendix 3
Slide 4: Quarterly Business Overview
Quarterly Business Overview
Slide 5: Quarterly Business Overview
Quarterly Business Overview AUM & FLOWS • At June 30, 2021, total AUM of $162Bn Up 5% from March 31, 2021 Up 25% year-over-year • Record high long-term AUM at quarter end of $159Bn • Third consecutive quarter of improving gross long-term flows • Fourth consecutive quarter of improving net long-t
Slide 6: Quarterly Business Overview
Quarterly Business Overview DIRECT • Approximately 135K new account registrations since acquisition INVESTOR • USAA 529 College Savings Plan BUSINESS Positive net new account growth and net flows since closing • Continue to see improvement in Direct Investor net flow profile • Contact center had 1
Slide 7: Investment Performance
Victory Investment Performance
Slide 8: Commitment to Long-Term Investment Performance
Commitment to Long-Term Investment Performance Total Mutual Total Mutual Funds 44 Funds and ETFs with 4- or 5-Star overall ratings 62% and ETFs AUM with 4- or 5-Star overall ratings % of AUM outperforming benchmarks % of strategies outperforming benchmarks 80% 80% 71% 72% 71% 64% 65% 60% 60% 60% 60%
Slide 9: Second-Quarter 2021 Financial Results
Second-Quarter 2021 Financial Results
Slide 10: Second-Quarter 2021 Financial Results
Second-Quarter 2021 Financial Results SECOND • $222MM revenue QUARTER Up 4% from Q1 2021 FINANCIAL Up 22% from Q2 2020 RESULTS • GAAP operating margin of 42.9% • Adjusted EBITDA margin was 50.6% • Record Adjusted EBITDA of $112.2MM • GAAP Net Income of $69.3MM • Record GAAP Net Income Per Dilute
Slide 11: Assets Under Management
Assets Under Management • Total AUM of $161.9Bn at June 30, 2021 $Bn Up 5% from March 31, 2021 Retail Institutional Direct Up 25% from June 30, 2020 ($mm) • Diversified distribution $161.9 Retail $154.3 $147.2 Institutional $132.7 Direct Q3 '20 Q4 '20 Q1 '21 Q2 '21 Assets under management
Slide 12: Long-Term Asset Flows
Long-Term Asset Flows • Gross LT sales of $10.0Bn $Bn 49% increase in Q-o-Q Sales Gross 3/31/18 Sales Gross Redemptions Net Flows 93% ($mm) increase in Y-o-Y Sales $10.0 • Multiple franchises/strategies and products generated long-term net inflows in Q2 including: $6.7 $5.7 RS Global $5.1 Tr
Slide 13: Revenues
Revenues •($mm) Q2 2021 revenue of $222MM 3/31/18 $MM 9/30/17 Up 4% vs Q1 2021 $221.9 Up 22% vs Q2 2020 $212.9 $105.0 $200.4 $188.7 Operating Metrics Q3 ‘20 Q4 ‘20 Q1 ‘21 Q2 ‘21 Average AUM ($Bn) $133.1 $139.6 $151.1 $158.5 Average Fee Rate (bps), as reported 56.4 57.1 57.2 56.2 13
Slide 14: Expenses
Expenses • Q2 2021 total expenses increased $1.9MM $MM 10 (1%) vs Q1 2021 $130.1 $132.0 90 $127.8 Driven by $3.2MM increase in non- $115.9 80 cash accounting adjustment for future acquisition earnout payments 70 Lower reported compensation 60 expenses partially offset by higher 50 non-personnel
Slide 15: Non-GAAP Metrics
Non-GAAP Metrics ($mm) 3/31/18 9/30/17 • Q2 2021 Adjusted Net Income $MM except per share data (ANI) with tax benefit of $1.18 per $1.40 ANI Tax Benefit ANI with tax benefit per diluted share diluted share Up 4% from Q1 2021 $1.18 $100.0 $1.13 $1.20 Up 33% from Q2 2020 $1.07 $1.00 $87.2 • Q2 202
Slide 16: Balance Sheet & Capital Management
Balance Sheet & Capital Management
Slide 17: Balance Sheet Strength
Balance Sheet Strength ($mm) 3/31/18 9/30/17 $18 7.0% • Cost of debt reduced by 63% from Cost of Debt (in $mm) Interest Rate $16.9MM in Q3 2019 to $6.2MM in Q2 2021 $16 • Debt reduced by 41% to-date1 following loan origination 6.0% $14 $142MM paid down YTD1 $164MM paid down in 2020 $12 • Interes
Slide 18: Capital Management
Capital Management Interest Expense and Other ($mm) 3/31/18 Debt ($MM) Financing Costs 9/30/17 ($MM) Selected Balance Sheet Items ($MM) 6/30/2021 $837 Cash / Cash Equivalents $32 $788 $8.2 $738 $7.7 Debt (Q3 to-date, further reduced to $646MM) $681 $681 $6.8 $6.2 Stockholders' Equity $816 Diluted Sh
Slide 19: Appendix
Appendix
Slide 20: Ongoing and Future Cash-Tax Benefits
Ongoing and Future Cash-Tax Benefits Section 338(h)(10) Election • Stepped up cost basis of acquired indefinite lived intangible assets is deductible for corporate income tax purposes over 15 years o $1.4 billion in total future tax amortization o $340MM in future cash tax savings, assuming 25% tax
Slide 21: Notes and Disclosures
Notes and Disclosures Information Regarding Non-GAAP Financial Measures Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the Company. These measures eliminate the impact of one-time acquisition, restruct
Slide 22: Notes and Disclosures
Notes and Disclosures Information Regarding Non-GAAP Financial Measures (cont.) Adjusted Net Income Adjustments made to GAAP Net Income to calculate Adjusted Net Income, as applicable, are: • Adding back other business taxes; • Adding back amortization expense on acquisition-related intangible asset
Slide 23: Consolidated Reconciliations of Adjusted EBITDA
Consolidated Reconciliations of Adjusted EBITDA For the three months ended, (in thousands) 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 GAAP Net income $ 44,720 $ 55,741 $ 54,895 $ 65,202 $ 69,270 GAAP Income tax expense (14,487) (17,027) (17,681) (17,662) (20,629) GAAP income before taxes 59,
Slide 24: Consolidated Reconciliations of Adjusted Net Income
Consolidated Reconciliations of Adjusted Net Income For the three months ended, (in thousands, except per-share data) 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 GAAP Net Income $ 44,720 $ 55,741 $ 54,895 $ 65,202 $ 69,270 Other business taxes 219 256 265 374 524 GAAP amortization of acquisit
Slide 25: Detailed Reconciliation of Q2 '21 Adjusted Net Income
Detailed Reconciliation of Q2 ‘21 Adjusted Net Income (in thousands, except per-share amounts) Adjustments GAAP Amortization Tax Benefit of Other of Acquisition- Acquisition, Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Debt Issuance Total Non-GAAP Acquired Basis Taxes Intan
Slide 26: Detailed Reconciliation of Q1 '21 Adjusted Net Income
Detailed Reconciliation of Q1 ‘21 Adjusted Net Income (in thousands, except per-share amounts) Adjustments GAAP Amortization Tax Benefit of Other of Acquisition- Acquisition, Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Debt Issuance Total Non-GAAP Acquired Basis Taxes Intan
Slide 27: Detailed Reconciliation of Q4 '20 Adjusted Net Income
Detailed Reconciliation of Q4 ‘20 Adjusted Net Income GAAP Amortization Tax Benefit of Other of Acquisition- Acquisition, Goodwill and U.S. GAAP Business Related Stock-Based Restructuring and Debt Issuance Total Non-GAAP Acquired Basis Taxes Intangibles Compensation Exit Costs Costs Adjustments Basi
Slide 28: Detailed Reconciliation of Q3 '20 Adjusted Net Income
Detailed Reconciliation of Q3 ‘20 Adjusted Net Income (in thousands, except per-share amounts) Adjustments GAAP Amortization of Tax Benefit Other Acquisition- Acquisition, Debt of Goodwill U.S. GAAP Business Related Stock-Based Restructuring Issuance Total Non-GAAP and Acquired Basis Taxes Intangibl
Slide 29: Detailed Reconciliation of Q2 '20 Adjusted Net Income
Detailed Reconciliation of Q2 ‘20 Adjusted Net Income (in thousands, except per-share amounts) Adjustments GAAP Amortization of Tax Benefit Other Acquisition- Acquisition, Debt of Goodwill U.S. GAAP Business Related Stock-Based Restructuring Issuance Total Non-GAAP and Acquired Basis Taxes Intangibl
Slide 30: Notes and Disclosures
Notes and Disclosures Investing involves risk, including the potential loss of principal. There are no assurances that any fund will achieve its stated objective. All data in this presentation, unless otherwise noted, is as of June 30, 2021. Past performance does not guarantee future results. A fund
Slide 31: Notes and Disclosures
Notes and Disclosures Victory Capital means Victory Capital Management Inc., the investment adviser of the Victory Capital mutual funds, USAA Mutual Funds, VictoryShares ETFs, VictoryShares USAA ETFs, and USAA 529 College Savings Plan (Plan). Victory Capital mutual funds, USAA Mutual Funds, and the
Slide 32: Morningstar Score Report
As of June 30, 2021 Morningstar Score Report 4 and 5 Star Mutual Funds and ETFs Morningstar Morningstar Ratingsbasedonrisk-adjustedreturns OverallRatings Ticker Category OVERALL 3-YEAR 5-YEAR 10-YEAR DOMESTIC EQUITY ★★★★ ★★★★ ★★★★ Victory Munder Small Cap Growth Fund, Y Shares MYSGX Small Growth — o
Slide 33: Morningstar Ratings: Tax Exempt Fixed Income
Morningstar Morningstar Ratings based on risk-adjusted returns OverallRatings Ticker Category Overall 3-Year 5-Year 10-Year TAX EXEMPT FIXED INCOME Muni National ★★★★ ★★★★ ★★★★ ★★★★ USAA Tax Exempt Long-Term Fund, Institutional Shares ULTIX Long out of 144 out of 144 out of 123 out of 98 Muni Nation
Slide 34: Morningstar Ratings: ETF
Morningstar Morningstar Ratings based on risk-adjusted returns OverallRatings Ticker Category Overall 3-Year 5-Year 10-Year ETF ★★★★★ ★★★★★ ★★★★★ — VictoryShares US Small Cap High Div Volatility Wtd ETF CSB Small Value out of 409 out of 409 out of 383 ★★★★ ★★★★ ★★★★ — VictoryShares US Discovery Enha
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